Big Meat retrenches as meat alternatives lose their luster

13-Oct-2022 - Last updated on 13-Oct-2022 at 19:20 GMT

Image credits: Smithfield Foods (left), Tyson Foods (top right), and JBS USA/Planterra Foods (bottom right).

The nation’s leading meat companies all got in on the action on meat alternatives, with investments in plant-based and cell-cultured meat startups and their own dedicated consumer brands. But with category sales weakening in recent months amid surging inflation, where do they stand today?

Canadian meat processor Maple Leaf Foods was early to the game, acquiring plant-based brands Field Roast, Chao and Lightlife in 2017. However, most of the activity came in 2019, when Tyson Foods launched the Raised & Rooted brand; Smithfield launched its Pure Farmland range; and JBS USA announced the creation of Planterra Foods, a dedicated plant-based meat division in Colorado run at arm’s length from the mother ship.

Three years later, however, the mood appears to have soured somewhat.

Maple Leaf Foods: ‘We used to believe in a transformational category outcome…’

Speaking on Maple Leaf Foods’ Q2 earnings call on August 6 after its Greenleaf (Lightlife, Field Roast) plant protein business posted an -18.4% decline in sales, CEO Michael McCain said some resources that had been dedicated to plant-based would be reallocated to conventional meat in an exercise "of sizing the shoe to fit a new foot.

"We expect most of the manufacturing footprint will be in line by the end of the first half of 2023, as we migrate some of the excess capacity we have been holding for Greenleaf to growth opportunities in the meat business, particularly further processed poultry.

"So far, we decreased advertising and promotional spend to match projected category growth rates and have reduced the size of the Greenleaf organization by 25% already.

And while the firm remained committed to plant-based, steady, rather than hockey stick growth curves are now expected: “We used to believe in a transformational category outcome. This did not materialize… and we no longer believe that it will materialize.”

JBS: Axing US Planterra Foods plant-based division

Brazilian meat giant JBS, meanwhile, has just pulled the plug on its US plant-based meat division Planterra Foods three years after setting up the dedicated unit in October 2019 and just nine months after opening a new factory, although it says it remains committed to plant-based operations in Brazil and Europe.

“We continue to believe in the potential of plant-based options for consumers and remain committed to the alternative protein market. JBS will focus its efforts on its plant-based operations in Brazil and Europe, which continue to gain market share and expand their respective customer bases."

Tyson Foods: Raised & Rooted ‘still on the market’

Tyson Foods, which also threw its hat into the plant-based ring in 2019 with the nationwide launch of the Raised & Rooted brand, says the products are “still on the market” (an online search via the website reveals listings in retailers including Kroger, Safeway, Publix) but has not disclosed how widely available they are, or whether it is happy with their performance.

It declined a request to provide additional comment.

Smithfield: Scaling back

Pork processor Smithfield, meanwhile, is “scaling back,” and says its Pure Farmland plant-based portfolio – launched nationwide in late 2019 with meatballs, patties, and protein crumbles – is still available, but with “limited distribution," says a spokesman. He added the range has been trimmed, and now patties are "the primary focus."

He explained, “A small selection of Pure Farmlandproduct is still available in limited distribution. The products are currently available at Giant, Stop & Shop, Food Lion, AWG, Brookshire’s, Hy-Vee, Meijer, Wakefern, UNFI and WinCo Foods.

"We have scaled back to the core items in the Pure Farmlandportfolio to reduce complexity and focus on our core protein market. We will continue to listen to our customers and provide the products they want.”

Tom Mastrobuoni: The legacy food companies… are saying ‘We'll have a plant-based brand because we need to have one, but we can pull back anytime we want’

Speaking to FoodNavigator-USA last month, Tom Mastrobuoni, chief investment officer at food tech investor Big Idea Ventures, who previously worked at Tyson Foods’ corporate venture arm Tyson Ventures, said big meat and CPG cos understand the longer-term strategic importance of getting into the alt protein space, but said the limitations of current offerings have become more apparent at a time when budgets are tightening and shoppers are focused on value.

And while many large meat companies have placed big bets on plant-based, they always have the option to pull back and retrench at times such as this when some less engaged consumers that dipped into the category in the early months of the pandemic have pulled out again, he noted.

“The legacy food companies are already making enough money from the old stuff so they're saying we'll have a plant-based brand because we need to have one, but we can pull back anytime we want."

US retail sales, meat alternatives: September 2022 vs September 2021

plant-based-meat-GettyImages-Aamulya — GettyImages-Aamulya

Frozen and refrigerated meat alternatives combined: dollar sales -1.1%, unit sales -11%
Total food & beverage sales: +9.5%, unit sales -4.1%
Frozen meat alternatives (which account for 2/3 of category sales): dollars +7%, volumes +3.2%, units -8.3%
Total frozen food sales: dollars +9.7%, unit sales -6.2%
Frozen meat/poultry/seafood: dollars +7.1%, units -9.2%
Total meat/poultry/seafood dept excl frozen: dollars +4.1%, volume -2.5%
Refrigerated meat alternatives: dollars -17.1%, volumes -22.5%

Source: IRI data crunched by 210 Analytics.

Inflation figures September 2022:

All food: +11.2% YoY
Food-at-home: +13% YoY
Food away-from-home: +8.5% YoY.

Source: Bureau of Labor Statistics

Interested in the future of meat?

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FIRESIDE CHAT: Cell-cultured (a.k.a. ‘cultivated’) meat: Foodtech fantasy or the future of meat?

Dr Elliot Swartz, lead scientist, cultivated meat, The Good Food Institute and Elaine Watson, senior editor, FoodNavigator-USA

Growing meat from cells in bioreactors instead of living breathing animals should logically be more efficient, as resources are spent on growing only the cells that make up the meat product rather than keeping an animal alive. So is cultivated meat a no brainer, or does the technology face ‘intractable’ problems at food scale?

PANEL: Meat 2.0: With weakening sales in the alt-meat segment prompting some serious soul-searching, what does the future hold for meat alternatives, how do the available options stack up, what will distinguish the winners from the losers in the category, and how do consumers feel about the next generation of meat?